Microsoft Dynamics NAV 2009
Wholesale Distribution White Paper This paper explains how Microsoft Dynamics NAV 2009 can integrate business information from across the organization to help increase efficiency, reduce costs and cycle times, and manage operations for improved profitability.
November 2008 www.microsoft.com/dynamics/nav iCepts Technology Group, Inc. www.icepts.com 717-704-1000 x3010
Contents Introduction ....................................................................................................................... 3 Executive Summary ........................................................................................................... 3 Challenges Facing Wholesale Distributors ..................................................................... 3 Solving the Challenges: How Technology Can Help ...................................................... 4 Optimize Efficiency and Profitability with Microsoft Dynamics NAV ......................... 4 Connect People with the Information They Need .............................................................................................................. 5 Streamline and Automate Processes for Enhanced Productivity ................................................................................... 6 Optimize Inventory Management and Replenishment ..................................................................................................... 8 Gain Insight for Improvement and Growth ........................................................................................................................... 9 Achieve a Low Total Cost of Ownership.................................................................................................................................. 9
Technology Overview ...................................................................................................... 11 Conclusion ........................................................................................................................ 11 Appendix: New and Enhanced Inventory Management Features and Functionality in Microsoft Dynamics NAV 2009 .......................................................... 12
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Introduction This white paper is intended for midsized companies specializing in wholesale distribution and whose primary operations involve the acquisition, storage, customization, repackaging, and shipment of goods to retailers. It reviews how Microsoft Dynamics® NAV 2009, an adaptable, end-to-end business management solution with built-in wholesale distribution functionality, can integrate business information from across the organization. This can help wholesale distributors increase efficiency, reduce costs and cycle times, and manage operations for improved profitability. After reading this paper you will understand: •
How improved integration of business information can save time, effort, and money through process automation and optimization of inventories, warehouse layout, and workflows.
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The importance of integration for gaining insight into processes, product and operational performance, margins, and profitability.
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Why Microsoft Dynamics NAV 2009 is an ideal solution to help companies overcome challenges wholesale distributors face today.
Executive Summary In an environment of global competition, increasing item and channel complexity, and tight margins, small and midsized wholesale distribution organizations need an integrated business management solution that can provide specific inventory and warehouse management tools in addition to core financial management and sales applications. The right technology can bring together comprehensive organizational information, automate manual tasks, connect processes and workflows, enable fact-based inventory management, and provide managers with clear visibility into business performance, margins, profitability, and opportunities for improvement. Microsoft Dynamics NAV is an integrated business management solution designed specifically for small and midsized wholesale distribution companies to help them streamline warehouse operations, increase productivity, improve inventory management, control margins, and achieve a low total cost of ownership. Integration of warehouse and inventory management functionality with financial management, customer relationship management (CRM), supply chain management, and other business processes helps ensure efficient communication and collaboration throughout the organization and with trade partners. The solution’s flexible, modular structure enables the addition of new or custom functionality over time to match the growth and evolution of the business. In the highly competitive and increasingly complex world of wholesale distribution, Microsoft Dynamics NAV can deliver a solution for efficient workflows, fast order cycle times, optimized productivity, and increased customer satisfaction.
Challenges Facing Wholesale Distributors Wholesale distributors occupy a middle position in the supply chain between manufacturers and secondary distributors or retailers for a wide range of durable and non-durable goods, industrial goods, and consumer products. This positioning presents unique challenges to profitability. In today’s competitive global marketplace—where supply networks are becoming increasingly complex and customers demand more choices, faster fulfilment, and lower prices—wholesale distributors often find themselves squeezed from both sides.
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Increasingly, satisfying diverse customers means providing custom products and packaging. A growing number of items and SKUs (stock keeping units) can add complexity and cost to inventory management. At the same time, global competition means that retailers can, and do, demand faster service, lower prices, and compliance with requirements such as radio frequency identification (RFID). Finally, companies of all sizes conduct business across international borders, which adds the complexity of dealing with multiple currencies, languages, market expectations, and regulatory requirements. As a result, many wholesale distributors struggle to meet customer needs while still turning a profit. To survive and thrive in this pressured supply chain position, a wholesale distribution company needs to control already tight margins by increasing efficiency and eliminating waste. Yet many distributors find themselves hindered by manual or disconnected processes, information delays, excess inventory, and purchasing information that’s locked in the minds of individual employees. The good news is that technology can help by integrating processes, streamlining information flows, and providing easy access to the information required for confident decision-making and operational improvement.
Solving the Challenges: How Technology Can Help An appropriate and integrated business management solution can help wholesale distribution managers optimize operations and enhance profitability by connecting people and processes. Many companies have evolved using separate systems for sales and marketing, purchasing, and invoicing, with limited or no automation for the warehouse. The disadvantages of such disconnects include wasted time, increased risk of error, higher costs, missed opportunities, and unhappy customers. The right solution can integrate not only customer, order, and financial information but also complex item structures and inventory tracking, warehouse layout and use, pick/pack processes, labelling, shipping, and order tracking. Repetitive tasks or those dependent on successful completion of an upstream process— such as order distribution, generation of picking lists or packing slips, carrier assignment, or customer invoicing—can be automated or batch processed to save time, reduce errors, and focus employee attention on satisfying customers. Investments in inventory can be maximized by improving decisions related to item acquisition, storage, handling, and replenishment. Finally, quick access to and analysis of key business information can increase a company’s success by empowering managers to plan effectively, make smart, informed business decisions, and comply with regulatory or customer mandates ranging from Sarbanes-Oxley to product tracking and recall capabilities. Yet small and midsized companies can find it difficult to find an attractively priced, end-to-end business management solution that is at once easy to use, fast and easy to implement, readily adapted to meet unique business or industry requirements, and flexible enough to provide a long-term solution as the company grows.
Optimize Efficiency and Profitability with Microsoft Dynamics NAV Microsoft Dynamics NAV delivers integrated functionality to support all your order entry, inventory, warehouse operation, fulfillment, shipping, and financial management needs so you can get goods to customers quickly and profitably. Microsoft Dynamics NAV offers wholesale distributors the ability to automate manual procedures, improve replenishment decisions, process orders quickly, improve fill rates and customer satisfaction, access quick feedback on business performance, and get strong returns on inventory investment. Key solution areas include: 4
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Supply chain management (including procurement, warehouse management, and distribution)
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Customer relationship management
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Financial management
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Manufacturing
Built on Microsoft technology, Microsoft Dynamics NAV works smoothly with many other Microsoft programs and technologies, enabling employees to work productively and gain insight for informed decisions. Easy to implement, learn, and customize, a Microsoft Dynamics NAV solution can help you connect people, processes, and information throughout your business to: •
Empower your workforce to save time, reduce costs, and increase customer satisfaction.
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Increase productivity by eliminating manual processes, streamlining warehouse operations, and enabling fast, accurate fulfillment and invoicing.
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Take control of items and inventory to reduce inventory costs.
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Gain insight into your most profitable products, business performance, and opportunities.
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Achieve a fast return on investment and a low total cost of ownership.
Connect People with the Information They Need With Microsoft Dynamics NAV, you can create a highly productive work environment where sales, CRM, order fulfillment, shipping, returns management, and accounting processes share the same up-to-date information. Your people can readily access this information as needed, without having to switch between a variety of separate applications or systems. By centralizing information in a single database, wholesale distribution companies can reduce redundant data entry, minimize rekeying errors, and help ensure accurate, timely information in every department. Easy drill-down capabilities mean details are never more than a few clicks away. Especially designed to deliver comprehensive information in one end-to-end business management solution, Microsoft Dynamics NAV can help deliver dependable information that your people can use to make reliable promises to customers, fulfill orders quickly and accurately, and boost customer satisfaction. Compliance with regulatory and customer mandates also becomes easy with comprehensive item, order, and transaction tracking. Also, if your business crosses international lines, the solution’s robust multilanguage and multicurrency support helps remove the complexity of communication, financial transactions, and reporting across geographies. Your people can work with trade partners in their own languages and currencies to help smooth relationships while maintaining straightforward and accurate financial reporting at home. Increase order status visibility When you can increase the visibility of orders throughout your operation—from order entry to picking and shipment status—you can keep fulfillment on track and provide accurate answers to customer inquiries. Because the solution features tight integration with the Microsoft® Office system, business information remains right at your fingertips even when you’re working in familiar applications such as Microsoft Office Outlook®, Microsoft Office Word, or Microsoft Office Excel®. That means your people can rapidly reference account data, price lists, inventory records, and shipping histories to quickly answer customer questions and provide comprehensive service. 5 MICROSOFT DYNAMICS NAV 2009: WHOLESALE DISTRIBUTION
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Save time with self-service and Web-based access to information Give customers and suppliers self-service capabilities through the Internet without compromising information security. Self-service options can range from requests for quotes to delivery confirmations and invoicing. These self-service capabilities can help trim the cost of transactions and free your people for more complex tasks while streamlining customer support, billing, and replenishment activities. In addition, remote employees such as sales representatives or service teams can be productive anytime, anywhere. Microsoft Dynamics NAV also offers an easy alternative way for employees to work with business information on the company’s intranet. Employee Portal in Microsoft Dynamics NAV provides a Webbased interface where people can view almost all company data online through a Web browser rather than through the solution application itself. The presentation of information in this framework is intuitive and requires very little training because it looks and feels like the other Microsoft programs. By defining roles and access rights for your people and valued supply chain partners, you can control access to sensitive business information while extending other information and processes to the people who need them. Finally, the solution’s integration also supports improved collaboration between departments and with suppliers and customers. You can make business information and documents available to team members and help ensure fast, efficient interaction and teamwork through collaboration portals using Microsoft Office SharePoint® Server 2007. In addition, any SharePoint document may be linked to a record or transaction in Microsoft Dynamics NAV. For instance, using SharePoint, you could link a Word document detailing a test specification to an item card or a quality assurance report to a purchase order return. That means supporting documents can be accessed directly from information within Microsoft Dynamics NAV.
Streamline and Automate Processes for Enhanced Productivity Microsoft Dynamics NAV can also empower wholesale distributors to streamline warehouse receiving and put-away, picking, packing, and labeling processes to reduce order cycle times and improve on-time delivery rates. You can also increase order fill rates with accurate availability information that can help people make promises to customers and reserve goods immediately. Because the solution integrates information from one end of the business to the other, you can automate previously manual steps such as order distribution to warehouse teams and the creation of picking or packing lists, shipping labels, manifests, and invoices. Information flows directly from one process to the next, and the completion of tasks can automatically trigger the next process without delays. You can select from three levels of warehouse management functionality to tailor the solution to your exact needs with the flexibility to grow as your operations become more complex. Map inventory to warehouse locations to enable guided put-away and picking for the most efficient goods handling. Optimize warehouse layout and workflow, balance workloads, identify bottlenecks, and create what-if scenarios to guide changes to workflows as business needs evolve. Increase the efficiency of everyday warehouse activities By capturing and integrating comprehensive order, item, and warehouse information, and making use of defined locations, zones, and bins for optimal workflows, Microsoft Dynamics NAV can help you: •
Plan the receipt of inbound shipments and streamline receiving processes, including crossreferences to POs or other source documents.
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Guide item put-away with directives based on preconfigured criteria such as item sales rates and utilization which helps steer the item to its correct location right from the start and avoids costly future internal movements 6
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Calculate and create replenishments of frequently used bins to focus on fast movers.
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Pick items to stage or ship, and use cross-dock orders for greater efficiency or use the “pick according to First-Expired-First-Out (FEFO)” which utilizes expiration dates to determine the items to pick.
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Efficiently move and track goods within or between warehouses using transfer orders.
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Handle sales returns to inventory, to damaged stock, or to scrap.
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Keep processes on track by setting up automated notifications to alert the right people for fast response to contingencies such as transaction changes or overdue deliveries.
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Comply with customer or retailer requirements for specific product and order identification, tracking, labeling, or unitizing standards.
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Quickly assign the most cost-effective carrier or shipping service and monitor outgoing shipments to help ensure delivery.
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Fulfill orders with partial shipments from more than one warehouse location, while maintaining the option to split or consolidate invoicing.
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Perform physical inventories and reconciliation easily, with the option to implement cycle counting for improved efficiency.
And, when your business is ready, further increase operational speed and meet customer mandates when you can easily integrate radio frequency identification (RFID), barcoding, or other Automated Data Collection Systems (ADCS) into your operations.
Streamline workflows when you can assign products to warehouse zones based on movement rates and the most efficient put-away, movement, and picking workflows.
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Optimize Inventory Management and Replenishment With Microsoft Dynamics NAV, you can take control of item inventories to maximize your inventory investments. Multi-dimensional inventory records mean you can identify items with as many variations and cross-references as you need. With the fully integrated inventory management functionality of a Microsoft Dynamics NAV solution, you can: •
Create item records and assign multiple SKUs as well as units of measure (UOMs), serial numbers, lot numbers, physical attributes, and expiry dates.
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Create bins through a batch job that matches bin records with your physical warehouse layout.
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Assign items to bin locations based on product storage requirements, sales rates, special handling requirements, or other criteria.
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Identify slow-moving stock and items about to expire.
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Separate inactive inventory from active stock and identify unprofitable inventory for disposition.
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Look up available-to-promise and inbound shipment quantities to make customer promises with confidence and help ensure realistic delivery commitments.
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Track items from supplier to customer to easily comply with traceability and chain-of-control mandates.
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Reduce shrink and other carrying costs with accurate inventory tracking and up-to-date information for finely tuned replenishment decisions that help eliminate excess and aging stock.
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Link inventory records for multiple warehouses to eliminate unnecessary stockouts and coordinate safety stock and replenishment.
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Break down inventory costs according to categories such as materials, capacity, subcontracting, and overhead to understand cost of goods sold (COGS).
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Control the value of inventory over time and gain accurate views of inventory costs by defining shorter open inventory periods that can be closed for posting as the fiscal year progresses.
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Maintain accurate inventory records when you can implement cycle counting or update records on the fly with ADCS and RFID capabilities in the warehouse.
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Achieve clear visibility into inventory turn rates, costs, slow-moving stock, item margins, and the profitability of individual items or product lines so you can make smart decisions and reduce inventory levels, costs, and warehouse space requirements.
Improve replenishment efficiency You can optimize replenishment decisions and timing by using robust tools for inventory planning and replenishment. These tools help you: •
Clearly understand item costs, cost components, and margins to determine profitable pricing.
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Understand item lead times, volumes, and sales cycles to gain leverage with suppliers.
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Integrate purchasing and sales information to support just-in-time replenishment.
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Identify non-stock candidates for special orders or drop-shipment.
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A Microsoft Dynamics NAV solution eliminates inventory headaches while giving you the insight to boost inventory efficiency.
Gain Insight for Improvement and Growth Microsoft Dynamics NAV provides a wide range of business intelligence (BI) capabilities that enable you to understand your business performance, trends, and opportunities, and quickly turn data into actionable information. With Microsoft Dynamics NAV, you can: •
Drill down to details to grain insight into revenue drivers, trends, margins, and profitability
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Analyze costs to identify potentials savings, make inventory or pricing adjustments, and assess the likely return on investment of potential product changes.
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Spot trends and market shifts to identify potential new products, markets, and customers.
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Use in-depth analysis of customers, products, and profitability to offer value-added services such as warranty and service agreements, new product and packaging combinations, or consulting regarding product purchase and use.
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Simplify charts of accounts by assigning dimension hierarchies that capture all relevant data while streamlining bookkeeping and audits.
Improve access to critical business intelligence With Microsoft Dynamics NAV, your people can benefit from access to real-time, integrated data and builtin analysis tools that can provide summaries and details of everything from production schedules and inventory levels to margins, profitability and product performance. Data can be extracted, analyzed, and presented using programs such as Excel, Word, and Outlook, or exported in any format using Ecma Office Open XML Formats. Microsoft Dynamics NAV works with other Microsoft BI applications for sophisticated intelligence requirements. Microsoft SQL Server® Analysis Services provides integrated views of business data for advanced reporting, online analytical processing (OLAP), and data mining. With SQL Server Reporting Services, you can quickly create reports from scratch and share them with others. Microsoft Dynamics NAV makes it easy for your people to make confident, informed decisions and respond rapidly to competitive challenges, seize new market opportunities, and build strong partnerships with customers.
Achieve a Low Total Cost of Ownership Research shows that companies who use Microsoft Dynamics NAV earn a fast payback and benefit in the areas of productivity, business intelligence, and cost reduction. An independent study of 34 companies by Nucleus Research, a leader in the return-on-investment analysis of technology, found that 77 percent of Microsoft Dynamics NAV customers achieved a positive ROI with an average payback period of 23 months. 1 Tailor the solution to your unique needs The flexibility of Microsoft Dynamics NAV means you can implement only what you need to fit your current operational requirements without getting bogged down in complicated configurations or an 1
Nucleus Research, Real ROI Report: Microsoft Dynamics NAV, July 2006.
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overbuilt installation. Specific functionality such as e-business modules can be purchased separately, now or in the future. In addition, you can easily customize fields and screens to work with your terminology and practices and to integrate the solution with existing applications and systems. You can also extend the solution with additional functionality. Hundreds of existing add-ons are available and cataloged in a tool known as Solution Finder. With help from a Microsoft Certified Partner who has deep business experience in wholesale distribution and technical experience in Microsoft Dynamics NAV, you can customize the solution to reflect the specific technologies and regulatory requirements of your business and industry. Implement quickly Microsoft Dynamics NAV is quick and cost-effective to implement with the support of a Microsoft Certified Partner. The global network of Microsoft partners includes experts who specialize in solutions for wholesale distributors, so they speak your language, understand your concerns, and can answer your questions and guide decisions. They also have the experience to maximize the value of the solution’s open development environment, toolkits, and industry templates, all of which speed customization and implementation. With the Rapid Implementation Methodology (RIM)—a proven approach to fast, successful implementations—you can significantly reduce implementation time. Depending on the complexity of your installation, you may be up and running in days rather than weeks. RIM includes data templates for wholesale distribution, industry data files, and questionnaires for getting at key business information and processes, and implementation tools. Finally, the solution’s close integration with common Microsoft tools and its familiar and intuitive user experience make it easy for your people to begin using it quickly and with minimal training. Full integration with the 2007 Microsoft Office system, including Outlook and Excel, helps ensure that users can work with and share business information in familiar formats and using comfortable tools. That means your people remain focused on customer satisfaction and adding value for business success. Maximize your IT investments Because it is part of the Microsoft family of products and has been designed to work with the Microsoft platform, Microsoft Dynamics NAV can help you maximize existing technology investments in servers, database systems, and office productivity applications. This tight integration and shared technology also simplify the process of upgrading to newer versions of any individual element. Microsoft Dynamics NAV is easy to maintain and upgrade, so your business management solution can grow with your success. This scalability delivers a solution that works for you now and in the long term so you can achieve a fast return on investment and a low total cost of ownership over time.
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Technology Overview Microsoft Dynamics NAV works smoothly with the following Microsoft products for an integrated approach to a cohesive IT framework that can support your entire business. •
Windows Vista®
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Windows® 2000 and XP
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Windows Server®
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Microsoft Office SharePoint Server 2007
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Microsoft Windows SharePoint Services
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Windows Installer and Active Directory®
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Microsoft SQL Server and Microsoft SQL Server Reporting Services
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Microsoft BizTalk® Server
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The 2007 Microsoft Office system
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Windows Live™ Local Search
The solution may run using either Microsoft SQL Server or the Microsoft Dynamics NAV Database Server. Both options are designed for, and tightly integrated with, application functionality. The open development environment of Microsoft Dynamics NAV provides an integrated platform and tools that make it easy to quickly develop quality business applications and exchange data with specialized external applications. The foundation for all the business management functionality of Microsoft Dynamics NAV is in the Client/Server Integrated Development Environment (C/SIDE®), which is designed to make development of business applications simple and enable additional features such as OLAP, electronic exchange of business information, and roles-based portals.
Conclusion Microsoft Dynamics NAV provides small and midsized wholesale distribution companies with an end-toend, integrated business management solution that can empower the organization to streamline warehouse operations, increase productivity, control margins, and improve profitability. Integration with financial management, CRM, manufacturing, and other business processes helps ensure efficient communication and collaboration throughout the organization and with trade partners. The solution’s flexible, modular structure enables the addition of new or custom functionality over time to match the growth and evolution of the business. In the highly competitive and increasingly complex world of wholesale distribution, Microsoft Dynamics NAV delivers solutions for efficient workflows, fast order cycle times, increased productivity, and improved customer satisfaction for business success.
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Appendix: New and Enhanced Inventory Management Features and Functionality in Microsoft Dynamics NAV 2009 Microsoft Dynamics NAV 2009 includes a number of new features, functions, and other enhancements. The following inventory and supply chain enhancements are of particular interest to wholesale distributors. Item Tracking More robust item tracking functionality makes it easier to view, track, and trace items throughout production and handling processes—from raw materials to shipping of finished goods. Enhancements include: •
The capability to correct improperly handled items
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Insight into item availability conflicts with concurrent users
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Multi-line item selection to help people work faster and maintain a consistent flow of stock
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Support for FEFO picking to help reduce waste from expired goods
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Compliance with legislative requirements, including the European Union regulation EC 178/2002
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Potential for more focused recall activities with two-directional tracing, plus a faster way to search by serial and lot number, and through improved integration with Warehouse in Microsoft Dynamics NAV
Inventory Costing Improved inventory costing functionality helps ensure relevant costing information is available to accounting staff and other users. •
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Gain transparency of cost flows and resulting inventory valuations with: −
Improved average unit cost dynamics (available for all costing methods) that apply a unit cost per average costing period to all outbound entries within the specified period. Problems can be easily scrutinized by direct navigation to the entry.
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Cost traceability between the general ledger, including the origins of inventory-related amounts, and lookup from general ledger entries to value entries (and vice versa)
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An inventory-general ledger reconciliation tool that maps cost amounts in the inventory ledger to corresponding inventory-related accounts in the general ledger according to posting setup.
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A new Cost Breakdown Report that shares the breakdown of inventory cost outflow for inventory, work in process (WIP), and cost of goods sold (COGS); and breaks down the cost contribution according to material, capacity, subcontracting, overhead, and other shares.
Help ensure costing data trustworthiness with less time and worry wasted on verifying results. −
Inventory period closing aligns with accounting periods and prevents inventory value change by disallowing transaction and system postings.
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Cost update on sales statistics shows profit and cost amounts on the statistics form and relevant standard reports are shown as original and adjusted.
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New principles in Cost Adjustment Batch Job prevent inventory valuation report showing “zero” quantity and “xx” value across periods. Adjustments are posted on the invoice date, and if a period is closed, the adjustments post on the first date of the open period.
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Improved inventory posting structure in general ledger enables the general ledger and inventory to always reconcile.
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Average unit costs are now calculated by day, week, month, and accounting periods.
Enhance simplicity and help reduce data entry errors with improved cost reversal (returns) support, usability and resiliency improvements in costing-related batch jobs, undo item entry capability, and simplified costing setup on item cards.
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Sales and Purchasing Document Approval New functionality, including the ability to approve, reject with comments, or delegate approval to another, notification of new or overdue approval requests and e-mail notification with links to documents. Integration with Windows Live Local Search New functionality integrates Windows Live Local Search and other online map services, which enables people to view locations on a map and get directions from one location to another.
About Microsoft Dynamics Microsoft Dynamics is a line of financial, customer relationship, and supply chain management solutions that help businesses work effectively. Delivered through a network of channel partners providing specialized services, these integrated, adaptable business management solutions work like and with familiar Microsoft software to streamline processes across an entire business. For more information about Microsoft Dynamics, please visit www.microsoft.com/dynamics. The information contained in this document represents the current view of Microsoft Corporation on the issues discussed as of the date of publication. Because Microsoft must respond to changing market conditions, this document should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information presented after the date of publication. This white paper is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED, OR STATUTORY, AS TO THE INFORMATION IN THIS DOCUMENT. Complying with all applicable copyright laws is the responsibility of the user. Without limiting the rights under copyright, no part of this document may be reproduced, stored in or introduced into a retrieval system, or transmitted in any form or by any means (electronic, mechanical, photocopying, recording, or otherwise), or for any purpose, without the express written permission of Microsoft Corporation. Microsoft may have patents, patent applications, trademarks, copyrights, or other intellectual property rights covering subject matter in this document. Except as expressly provided in any written license agreement from Microsoft, the furnishing of this document does not give you any license to these patents, trademarks, copyrights, or other intellectual property.
About iCepts Technology Group, Inc. For over 30 years, iCepts Technology Group, Inc. has been working with wholesale distribution, manufacturing, and other industries with various technology offerings to help these organizations achieve efficiencies, streamline their supply chain, gain access to vital business reporting and control costs. Contact us today for further information or visit our website at www.icepts.com l
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